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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: russwinter who started this subject	5/7/2004 5:27:53 PM
From: russwinter	Read Replies (2) of 110194

Schaeffer's Daily Contrarian: Corn, and Energy, and Soybeans – Oh My! The Wall Street Journal Commodity Boom Is Showing Signs Of Coming to an End Published: 5/6/2004 Brief summary: "While demand for raw materials remains solid, a growing number of industry analysts and traders suspect that the commodity boom -- if not over -- is losing steam." Citing concerns that range from a potential slowdown in China's growing demand to new projects to increase production from suppliers, this article casts doubt on the uptrend in commodity prices. "We probably have seen the peak," notes one analyst, while it is reported that: "many analysts believe the projects are indicative of a shift in the cycle. Among other things, they could cool some of the panic buying that occurred in recent months, when some end-users feared there simply wouldn't be enough copper, nickel, iron ore or other resources to go around." Contrarian Takeaway: The pessimistic sentiment conveyed from analysts in this piece is interesting when you compare it to where the sentiment picture was perched in early March. As we noted in "A Growing Interest in Commodities?:""With commodities prices soaring and Federal Reserve Chairman Alan Greenspan concerned about inflation, some fund companies are urging people to protect themselves against higher prices by putting money into mutual funds that specialize in commodities." When viewed from a distance, it appears that investors were urged to buy commodities when the prices were rising and now that prices have retreated to lower prices they are urged to avoid them. As contrarians, we typically would look for increased optimism on a pullback as a warning sign. In this case, the increased skepticism may be a sign that that some short-term speculation has been wrung out of the market and that the overall uptrend is not over.

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